Do you know REITs or microinvestments?

Such a property purchase can mean a lot of things. You can invest in land, apartments, cottages, family or apartment buildings. An interesting opportunity is also non-residential premises, for example offices, warehouses or garages. Each such property has its own specifics. Are you buying an investment property? You have to count practically only on the payment of property tax. Are you investing in buying an apartment? This will worry you a lot more.

Either way, real estate is almost always a larger and long-term investment that needs to be carefully considered. A small mistake is enough, for example, the choice of a city that depends on the local factory. This can become obsolete and the apartments in the given city lose value. Or the population will decrease in the city, and renting with a higher supply of vacant apartments will no longer be so profitable. What about if they build a bus or bypass around your house?

When choosing a property to invest in, you need to consider all of these circumstances and try to estimate what impact they may have on your property in the future. Then you also need to calculate what financing will be best for you, and perhaps include other investment instruments in your decision making.
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Buying an apartment for cash or financing with a mortgage

That your bank account does not languish and you can buy an apartment? Congratulations! But it's good to know that it pays to take out a mortgage even though the money in the account would be. Especially if you achieve a low interest rate (2 — 3%). The question is, how else (and better) can you evaluate unused money like this? If you are a little adept at buying stocks or other assets and can invest with a higher return than 2-3%, it is worth taking out a mortgage and investing the cash. In the long run, you will earn on the difference between the amount of return and the amount of interest on the mortgage.

But do not forget about changes in the interest rate after the fixing period has elapsed! If you go the way of a mortgage, you will not miss paying 10 or 20% of the total price of the apartment and then paying off the loan with interest. Mostly it is a long-term project for own housing or for subsequent rent. It is ideal for you rental income (after tax) covered the mortgage payment even with interest. Just basic numbers.
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REITs and ETFs

But direct purchase is not the only way to invest in apartments or real estate in general. Real Estate Investment Trust, the so-called REIT, is definitely one of those worth mentioning. If you choose a REIT to invest, you are practically investing in a limited liability company that invests in real estate. There are hundreds of such trusts around the world, and especially in the USA they are quite popular. The advantage is quite high dividends (money that regularly goes into your account), and at the same time relative carefree for you. A REIT buys, leases, manages and sells real estate, and sends returns to your account on a regular basis. Sounds great, doesn't it?

Advantages and disadvantages:

• high dividends
• quick monetization when needed
• you buy shares on the stock exchange
• investment is exposed to stock market fluctuations

There are also so-called. ETF — funds that purchase shares of different REITs to diversify the risk of buying only one REIT.

One of the biggest benefits of buying a REIT or real estate ETF is the opportunity to sell them immediately on the stock exchange, which may not be the case with real estate funds. So if you need to monetize your investment in a turn, it's really easy with a REIT or ETF.
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Real estate funds

Real estate funds specialize in apartments, commercial properties or houses. There are many Czech and foreign funds to choose from. which often differ, for example, in the length of time you have to keep the money in it and not have the chance to withdraw it. It usually takes a year to several years. On the other hand, they are more stable, unlike REITs, they are not subject to stock market fluctuations and you are comfortable avoiding the management of specific properties.

Advantages and disadvantages:

• stability, you are not exposed to stock market fluctuations
• you need to save money for a year to several years
• lower dividends
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Micro-investment

An increasingly popular way to invest in real estate, and most often in apartments, are microinvestments, to which Investown is dedicated. Investing takes place in a simple application environment, where you choose specific apartments, houses and commercial properties in a specific location and know detailed information about their history. Based on this you invest from CZK 500 and you get a profit for the duration of the investment (usually 12-60 months).

It is a stable form of investing, where you do not expose your money to market fluctuations. capitalizing at the same time ranges from a very attractive 7% above. As with REITs, you can monetize a microinvestment immediately — for example, by selling it to 10,000 other users — and transfer the amount to your account.

Unlike REITs, microinvestments are more stable, because there is no need to buy on the stock exchange, worry about fees and potential risk.

Advantages and disadvantages:

• stability, you are not exposed to stock market fluctuations
• attractive valuation starting at 7% per annum
• investment layout, you can make a portfolio of multiple properties
• quick monetization if necessary.